OFFICE OF CURRENT INTELLIGENCE DAILY DIGEST

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T01146A000300240001-3
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 13
• Document Creation Date: December 27, 2016
• Document Release Date: July 17, 2012
• Sequence Number: 1
• Publication Date: July 24, 1951
• Content Type: REPORT

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_.1012-19ReffEr 4 CI
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CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
DAILY DIGEST
JUL 24 1951
Date:
NOTE: 1. This summary of significant reports has been
_prepared primarily for the internal use of the
Office of Current Intelligence. It does not
representa complete coverage of all current
reports h CIA or in the Office of Current
Intelligence.
Comments represent the preliminary views of
the Office of Current Intelligence.
3. Marginal letter indications are defined as
follows:
- items indicating Soviet-Communist
intentions or capabilities
flirt - important regional developments,
not necessarily related to Soviet/
Communist intentions or capabilities
tiCnt - other imformation indicating trends
and potential developments
-spep-sterer?
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SECTION i (soya?)
USSR. Soviet Press Comment on Korean Talks. Breaking silence on the
agenda of the Korean discussions, the Soviet press on 19 July reported
US opposition to Communist conditions. A TASS despatch based on a
Pyongyang press commentary claimed that the US g (1) had categorically
opposed raising the question of the withdrawal of foreign troops from
Korea; and (2) had tried to by-pass the Malik proposal in order to ob-
tain a demarcation "much to north" of the 38th Parallel. Nam Il was
quoted as insisting on those conditions as pledgeagamt new military out-
breaks and proposing measures for a cease-fire. These included a de-
militariztd: zone, a commission for control thereof and the return of
POW's following cease-fire. CONT t To
? date there has been no change in Communist insistence that a cease-fire
in Korea be pegged to the withdrawal of foreign troops. Although Moscow
has refrained from direct comment on the negotiations, Soviet support
for the demand is indicated by its relaying of Pyongyang press comments.
One such comment on 24 July insisted on the withdrawal of foreign troops
and charged that the refusal to do so indicated US intention to "convert
South Korea into its military springboard." Therefore, the commentary
concluded, in the interests of security, independence and world peace,
"our representatives in Kaesong resolutely insist on the final solution
of this question,"
kps_2Sjsal.etJ,irtantTaslteratureDefined. One of the principal
tasks of literature in the USSR is defined as the struggle against
vestiges of capitalism, and propaganda for the great fri ndship and co-
operation that should exist alnoiig the Soviet peoples. Soviet literature
is described as a multinational literature, Socialist in content and
national in form, with all the national literatures of the USSR con-
tributing to the development of each one separately. Various ideologi-
cal distortions are reported to have recently shown that certain Party
organizations, as well as the Union of Soviet Writers and the editorial
boards of literary magazines, have failed to draw the necessary con-
clusion from the decisions of the Central Party Committee on questions
of literature and art. The Bolshevik Party is said to be anxious to ac-
cumulate a rich fund of spiritual culture, and for this reason calls on
Soviet writers to produce "truthful" and vivid works based on Socialist
reality. Soviet literature is described as having developed and as con-
tinuing to develop in "the struggle again t bourgeois culture, against
admiration of bourgeois capitalism0 in the struggle against nationalism
and cosmopolitanism." COMMENTa "Vestiges of
nationalism" was the reason given for the recent branding of So suras
poem "Love the Ukraine", and is an indication of the persistent diffi-
culties encountered by the Soviets in attempting to force the variegated
nationalities int a common mvuld.
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HT/ EASTERN EUROPE. POLAND. Rokossovski Assassination Rumor Proved 7alse.
The widely publicized appearances of Polish Minister of National Defense
Rokossovski and his alleged assailant Vice Minister of National Defense
Poplawski at various National Liberation Day Ceremonies in Warsaw on
19-21 July have effectively discredited rumors of Rokossovskies assassi-
nation. US Embassy Warsaw believes howevers that the appearance of
Rokossovski does not rule out the possibility that a crisis has occurred
in the Polish Army High Command. An Embassy observer who was present at
a Liberation Day rally on the night of 21 July noted that Poplawski was
placed apart from the principal guests and was largely ignored by Commu-
nist notables. COMMENT8 It is possible that
some disagreement exists within the Polish Army High Command. However, it
is unlikely that there is sufficient disharmony to be detrimental to the
efficient functioning of the Army. Rokossovski is noted for being a just
but strict disciplinarian who is able to get the best out of his subordi-
nates. Moreover, there have been xtensive dismissals of politically un-
reliable officers from all ranks of the Polish Army during the past two
years and their replacement with younger Russian-trained cadres.
"Au TRIESTE* US Political Adviser Ougos Ado tion of Italian Electoral Law
for the Trieste Elections, The Italian Government has made official
representations to the US and UK requesting that the Allied Military
Government in Trieste (AMG) adopt the Italian electoral law providing for
linked lists in the forthcoming Zone A Trieste communal elections. The
Italians consider that this system has proved valuable in combatting Commu-
ism in Italy and should therefore be adopted in Trieste. US Political Ad-
viser Unger s however, is opposed to the Italian requests pointing out that
the adoption of linked lists (1) would have no effect on the actual vote
which primarily reflects the Trieste populationes sentiment for or against
the Territoryes return to Italys (2) would be a violation of the peace
treaty which calls for proportional representations (3) would result in a
strong adverse reaction from the Yugoslav Government and (4) might pre-
cipitate a linked list coalition of local Independentists and Cominformists
based on common advocacy of an independent Trieste. Unger concludes that
adoption of the electoral law in response to Italian pressure would be
very damaging to AMGes ability to carry on effective administration.
COMMENT2 The Italian electoral law would grant the linked parties, which
obtained a plurality of the votes two-thirds of seats in the communal coun-
cils. In the 1949 communal elections on Zone A of Trieste s which was held
under the law providing for proportional representationsAh pr -Italian
parties in the commune of Trieste obtained 40 of the 60 councillor seat
Howevers in the five outlying communess which elect 100 councillors in ally
and where the Slovene and pro-Cominform vote is heavy, the pro-Italian
parties received only a minority of the vote. It is thug improbable that
the pro-Italian parties could benefit materially by the ad ption of the
Italian election law. Independentists and Communists in Zone A9 moreover,
would view its adoption as further proof f the abrogation of AMG authori-
ty. The Yugoslav D already aroused by the current Italian agitation over
Trieste would violently oppose the scheme as additional evidence of Western
support of Italian claims to Trieste.
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SECTION 2 (EASTERN)
"Bn JORDAN. Link Between. Former Grand Mufti and Murderer of Abdullah Sou: t.
Ithe dovernor o or erusa am is convince e ormer Grans u
of Jerusalem is involved in the murder of King Abdullah, but he has not
been able to uncover the organization behind the act. The US Vice Con-
sul in Arab Jerusalem reports-that Abdullah's assassin was supposedly-a
member of the nHoly War Fighters" (Jihad alegukaddas)? an Arab terrorist
group organized by the Arab Higher Committee during the last years of the
Mandate but disarmed b the Arab Ie ion durin the Palestine fighting*
CaNINEVTa
an organization bearing the name nHoly- War Fighters"
was organized by instructions from the former Grand Mufti early-in 1950.
Shadowy connections seem to exist between this group and Arab extremist
political parties such as the Moslem Brotherhood and the Syrian National-
ist Socialist Party; adherents of the latter group were responsible for
the murder of Riad al-Solha Mile terrorist groups cannot be considered
serious threats from a military angle, they create internal confusion,
will delay any compromise settlement with Israel, and will further alien-
ate the Arab states from the lest.
nen INDIA. Threat of Railway Strike Diminishes* The All-India Railwaymen's
Th)ich recently-voted to strike against the government
on 27 August, has now decided to re- en ne otiations for settlement of
its outstandin demands,
Unit
COMMENTa On 12 July, in response to
the railwaymen's strike action, the governmenb issued an order banning
strikes in essential industries under penalty of imprisonment. The ban
has apparently been successful in weakening the resolve of the railway-
men, despite their protests that it is an oppressive and arbitrary mea-
aure. The threat of a strike has not been completely removed, however.
_
INDONESIA. Chinese Er/lahaaxtpersonnel Denied Entrz. Seventeen additional
Chinese Communist Embassy staff members were denied entrance to Djakarta
upon their arrival on 22 July. The Chinese Ambassador, without making a
prior request or appointment, went to the home of the Prime Minister to
protest but the latter refused to see him. Contrary to the original be-
lief of the Foreign Office, the Chinese do have diplomatic visas which
were issued by the Indonesian Charge in Peiping without clearing the
matter in Indonesia. The Indonesian case for returning the Chinese is
therefore weakened, COMMENT The Indonesian
Foreign Minister told US Ambassador Cochran that his government regards as
an ninsultn the arrival without prior clearance with Indonesia of additional
Chinese Embassy staff members, and that the group will be retur e to China
"even if it means a diplomatic incident."
BURMA. Burma ReAsEta Drafttlataaaae Treaty, The Burmese Government, in
a'letter to the US, has rejected the proposed Japanese peace treaty de-
claring that "any draft treaty which makes no provision for payment of
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reparations to Burma (annot meet with our approval,"
? COMMENTt Burma is the first member of the
Far Eastern Commission, except for the Soviet Union, officially to
turn down the proposed treaty? although the Philippines has threatened
similar action. Burmese authorities had given no indication of a serious
intent to press for Japanese reparations until Philippine demands stimu-
lated a similar furor in the Burmese press. Fear of "provoking" Communist
China and a desire to propitiate leftist political elements in Burma, not
the question of reparations, are the chief reasons for the Burmese re-
jection.
INDOCHINA. Be Iattre R.,ep,94:q_dly.krdered Arrest of Fro-US Vietnamese.
The arrest of non-Communist nationalist:TranTrungDung by the Vietnamese
security service was ordered by General De Iattre as a result of Dung?s
visits to the US legation in Saigon.
COMMENTg? Dugs arrest
has caused resentment among the Vietnamese inasmuch as the reason for his
arrest appears to be his opposition to French policies and to the central
? Vietnam Government led by Tran Va Huu rather than his alleged "sympathyn
for the Viet Minh. It is not clear what role, if any, the French played
in this affair, but it is well known that the Frenc4 have on numerous
oceasions pressed the authorities of the Vietnam Government to limit the
activities of certain non-Communist nationalists reover, the French
authorities in Indochina hare shown exaggerated fears of US-Vietnamese
intimacy, The Vietnam Governments suppression of the nationalist Dal.
Viet Farty--erroneously viewed by the French as US-supported--was taken
with the approval of, if not on the order of the
"C" Communists C 6 Malfeasance in Certain Factories. Four important
factories in North and Nrtheaet China were cited by the Communist press
in late June for "incorrect planning? "negligence," and other errors which
have "caused heavy losses to the Government'.". Thee.plants ire the Peipiao
Coal Mining Bur au.(censured on two counts), the M.ukden machine factory No.
3, the Ho Cheng fattory at Chinchou, and the Taiyuan Iron and. Ste Works,
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"B" KOREA. EneNiationsInareasi. Far East Command reports
increase in the enemy2s night air operations in Korea. In addition to
the hit and run attacks ,f the P0-2 light bomber, recent enemy air activity
bias included 'e number of night interceptions by enemy aircraft, predomi-
nantly conventional fighter types, and a continuance of enemy night air
activity in the vicinity of Wonsan. According to Far East Command field
intelligence sources, night training activity is being conducted at Com-
munist air bases in Manchuria and a group of LA-92 has been deployed south-
ward to Sialuiju. Photo reconnaissance has revealed the presence of IA-type
aircraft 60 the Sinuiju airfield. Far ,East Command believes that the
enemy's capability of continuing and possibly intensifying night air oper-
ation will be increased And success in these operations might also encourage
the enemy to exploit this capability to a greater extent.
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COMMENTs This unusual number of charges may precede a purge of in-
dustrial executives. The loyalty of many experienced engineers may
be suspect because they are either ex-Nationalist employees, or western-
trained. If the Chinese Communists follow Soviet practice in this situ-
ation, they will soon publicize an alleged discovery of a widespread
conspiracy to sabotage the State.
"B"
-----IIava"ffice"ae?rtec.-----P?..?I---tslgf..---if?rPga-tiDi511t. Chiang
Kai-shek, in a personally written order to Admiral KWEI? Cine of the
?Chinese Navy, summarily dismissed a3 Naval officers on 15 July. MEI was
informed of this action !i .--oto, the Generalissimo's elder son,
in time to "save face."
was given authority t. release the a ec,e. personne as
do their jobs." The officers, among whom were KNEles nephew and brother-
in law, were accused of forming a new clique. All had served previously
with Admiral KMEI in the Army0 that a long-
standing feud between MEI and CHIANG Ching-kuo is rumored behi d this
example of "thought control!' at its worst.
COMMENTS Fear of defection of Chinese Nationalist naval units
has apparently prompted an intensification of bolitical controls.
1
401g_Symizaqg Confirms Unrest in a North Korean Province. Radio
Pyongyang on 20 July commended a Guard Corps unit for mopping up some 80
"reactionary bandits" who have been continuing their "desperate struggle"
in the mountain area of Hwanghae Province, COMMENT:
Quite a number of North Korean refugees Ile ing before the initial advance
of the Chinese Communists sought refuge in Hwanghae Province which lies
immediately north of the 38th Parallel on Korea's west coast. It is of
interest to note that Radio Pyongyang confirms the continued armed activity
of these anti-communist groups.
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SECTION 3 (WESTERN)
"B" GERMANY. Progress Is Made Toward Transfer of Political Power. A report
will be issuesie German4Elied negotiations on contractual
arrangements, which are a major part of the program to transfer political
authority to Bonn, lay the groundwork for a German defense contribution,
and carry forward the process of bringing Germany into the Western system.
The Occupation Statute, under which the three Allies have ruled conquered
Germany, will be substantially abandoned upon the conclusion of contracts
by which Germany will accept certain obligations. Since mid-May, repre-
sentatives of the Allied High Commission and of the Federal Republic have
accomplished a great deal in their discussion of contracts, although many
points of disagreement remain* The Germans, for instance, feel that they
do not need to be bound by contracts on all the two-score subjects proposed
by the Allies* A contract to ensure the preservation of democracy in the
Federal Republic is opposed by the Germans, who look to their contemplated
Constitutional Court to uphold civil rights and guarantee the constitution-
ality of German laws. They believe a parallel Allied control would only
discourage the growth of democratic feeling. This view is largely shared
by the Britishl but is rejected by the French and Americans, who feel that
the contracts must clearly spell out the Allied right to intervene when
German democracy is threatened* The Allies are reserving some powers which
theY will retain after contractual arrangements are concluded, Their
special status, deriving from quadripartite agreements, will allow them
to maintain forces in Germany and to ensure respect for international agree-
ments not covered by contracts, They continue to assume responsibility
in the matters of German unity and a peace settlement, and will retain their
powers to enact legislation and try cases of offenses against the Allied
forces. In emergencies, they will take action without consulting Federal
Republic authorities. The Germans concede the general right of the Allies
to a special status, but are far more disposed to accept the Allied
emergency pomer than the power to legislate.
Adenauer Personnel Action Ma Bring Public Repercussion. US
officials in onn expec possi e pu
lb censure of Chancellor Adenauerfs
replacement of Wilhelm Haas, Chief of Personnel in the new Foreign Affairs
Ministry, by Herbert Dittmann, in a dispute over basic personnel policy.
The main criticism is expected to center on the question of the backgrounds
of the two men, since Haas was a political persecute? of the Bazis_and
Dittman a nominal member of the Nazi party.
COMMENT: This action, when publicized, may be seized upon by the opposition
Social Democrats as a further means of discrediting the Adenauer Government*
The hiring policy of the Government, in bringing many of the former
diplomats with tainted Nazi records into the new foreign service, has
already been the subject of frequent attacks in the West German press*
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FRANCE/UK. French and British Cool Tomard UN Trade Talks with US SL The
rx representa ve on e on ro ommi ee or as es rase is
strongly opposed to holding a 20-August meeting of the Economic Commission
for Europe, to which the USSR has accepted an invitation. The British
representative termed the Soviet acceptance a "clever propaganda device"
calculated to provide the opportunity for dangling prospects of better
living conditions before the Western European countries at a time when
the UK balance of payments situation is deteriorating and export controls
against the Soviet bloc are being tightened. The French representative
has indicated that his country would "Itttop in close touch" with the British
on this matter. COMMENT: The UKgs vigorous
opposition stens both from its recognition ortErrutility of any effort
to expand East-West trade while the US position remains unchanged and from
the governments fear that the dissident Bevan group mould eagerly exploit
the anticipated Soviet propaganda. French cooperation with US East-West
trade control policies has been more milling in the past year. Recently,
France has resisted strong Polish demands for molybdenum and nickel, and
has agreed only tentatively to give the Poles a limited quantity of aluminum
In an effort to obtain desperately needed coal. Some French Government
economists mill be strongly tempted, however, to encourage increased imports
of food and raw materials from the East. They mould consider these as
complementary to a larger volume of US-financed imports of consumer goods,
an anti-inflationary measure now advocated by Some French officials.
"B" ITALY. Cabinet Crisis Reportedl Resolved. Premier De Gasperi has cleared
T1FWa7 175re7new I a ian a no 7 re ac ing a compromise agreement with
dissident elements of his Christian Democratic Party who were opposed to
the conservative financial policies of Treasury Minister Pella. Pella,
also Minister of the Budget, has announced that the Treasury Ministry will
be eliminated and its work taken over by the Ministries of the Budget and
Finance, The Budget Ministry is to coordinate and direct financial and
economic policy. It will reorganize the financial ministries, absorb the
,general direction of the Treasury and control important Italian 'economic
agencies such as the Italian delegation to OEECa The consensus of press
-rumors now is that Pella will retain the Budget Ministry, possibly with a
slightly more flexible financial policy. The left-ming Christian Democrats
led by Giuseppe Dossetti will be represented in some Cabinet post. De Gasperi
-will take the Foreign Affairs Minist on in the in robable event cf
Sforzags retirement.
COMMENT: These reports suggest
that Pellags position has been strengthener than weakened by the
cr?sis'De Gasperi has long planned to make Pellags Budget Ministry the
keystone of the Governments economic activity. It would appear that an
*portant post must have been promised the reformist Dossetti group if they
agree to the retention of Pella.
"C" Poor Wheat Cro Outlook Could Cause Labor Agitation. Current
estimates are
_
e a Ian ea crop e 0 per cent less than
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last years record crop. To offset this drop the government has agreed
to farmers demands for an increase in the collection price. Such an
increase would benefit large landowners in south Italy and would probably
raise slightly the price of bread and pasta. This rise mould probably
have more political than economic significance, and might induce the
unions to demand higher wages,
COMMENT: If the price of 'breadrises, the ommunis .oin ae a or
ErffEriation (CGIL) will probably seize the initiative in calling for wage
increases and be supported by the non-Communist unions. A. general strike
on this issue by all the unions mould embarrass the government and reinforce
Communist claims that organized labor has "regained unity of action".
BELGIUM. Press Recognizes Strategic Im ortance of S The US desire
friiTinze pa gs s ra egic geograp ic posi ion is rmed "understand-
able and realistic" by most of the Belgian press, despite cogent reasons
for French and British opposition, The Socialist newspaper, alone, is
critical of US policy on Spain, although a conservative independent paper
doubts the effectiveness of the Spanish contribution, while recognizing
Spainas strategic location.
COMMENT: The
shift from cautious to open approval of US policy tomard Spain by the Belgian
press reveals a willingness to accept Spain in the West European fold.
The Belgian Government probably will endorse the inclusion of Spain in
alffest European military alliance and probably mill meet with little op-
position, except from Socialists and Communists. Howeven a military policy that
appeared to establish the first line of defense at the Pyrenees rather than
in the area eatt of Belgium mould arouse serious and general opposition.
"B" SPAIN. Underground Labor Grow's Warn of Communist Gains, The Spanish op-
position omi e erior oe 4 nac oi-717-has predicted .a great
expansion of Communist strength in Spain with the warning that the Spanish
people, who are losing faith in US objectives, will turn to the Communists
for help against the Franco dictatorship. In a formal CIC protest against
any contemplated US economic and military aid to the Franco regime, US
lhabassy Madrid was reminded that the Spanish workers represented by the
Socialist and Anarchiet components of the Monarchist-led and pro-Don Juan
CIC, are "firmly decided not to coonerate" in Snainas industrial and military
effort unless Franco is removed.
;
COMMENT: The
Spanish Communist Party (PCE) is trying to capitalize on the growing sense
of frustration among the underground leftist groups in Spain. All com-
munist offers of financial aid in exchange for PCE control of a "popular
front" have been rejected so far because of the overwhelmingly ati
communist sentiments of the great bulk of workers within these groups.
It is believed unlikely, therefore, that Spanish workers will make common
cause with the communists or resort to sabotage (as indicated in the CICas
15 January letter to US Embassy Madrid) againat the Spanish defense effort.
The present protest, with its implied threats, is apparently for the purpose
of bringing pressure to bear on the US to demand a liberalization of the
Spanish regime. Without the cooperation of the other leftist labor grioups,
the PCE will remain ineffectual as a political force,
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CENTRAL INTELLIGENCE AGENCY
DAILY DIGEST SUPPLEMENT
JUL 24 1001
Not for dissemination outside 0/CI exid 0/NE.
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CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
24 July 1951
MCT ION 2 (EASTERN)
GoVernment Reaqhm4regment211LIteejetroleum CoMpany. An agree?
tent setting ninimum guarantees.for.the.level of.oil.production-and for
revenues has been reached between Iraq and the Iraq Petroleum Company.
Under the new terms Iraqi oil revenues in three years will be approxi?
mately 50 rillion sterling pounds annually. The agreement is believed to
be the most favorable in existences) but an exchange of letters betweeen
the two parties provides for its renegotiation should any neighboring
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COMMEn& From the few details available it appears that the new agreement
anewer 'the chief requirements of both parties. Ratification by the Iraqi
Parliament cannot p howeverp be assured0
the atmosphere is dharged with uncertainty and that responsible leaders are
becoming increasingly apprehensive of extremist elements,
INDOCH;NA kg_14,a_e_eAl_nre-gh-'-ao.SAn Ouster of Viet_Of4pia],. Premier
Than Van.Huu.told Minister Heath that the decision of the Vietnam Government
to accept the resignation of Than Van Tuyen from the high advisory post of
State Secretary was prompted by Tuyenls defense of a Vietnamese Catholic
newspaper editor, now nneer arrest for allegedly pro?Viet Minh statements,
Minister Heath considers Huues explanation of Tuyenos expulsion a lane one
and believes the d at the insistence of the French authoritiea,
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Ithe above-mentioned editor was arrested on General De 25X1
Lattres -order as a result of the editor?s visits to the US Legation in
Saigon.
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KOREA. Peace Treat Kill_g_larity Issue of Former Japaneseltametx_kLAmseg.
AMbassador NUccio has: en requested to advis the ROK Foreign Minister that
in order to avoid any possibility of a misunderstanding, the Department of
State is presently considering an amendm nt of Article 4 which would
recognize the legality of the transfer of former Japanese properties in
Korea to the ROK. COMMENTs This amendment 25X1
should take care of the most strenuous dbjection of both the South Korean
Government and the principal opposition party to the draft nf tlnA 77panese
Peace Treaty.
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PIC" JAPAN. Government Defers Decision o Trade:enc' in Formosa. The Chief of
the Chinese NatiOnalist Mission in.Japan has again complained to the US -
Political Advisor over delay in the establishment of a Japanese Government
Overseas Agency in Formosa. Meanwhile, although Prime Minister YOSHIDA,
previously had been anxious to open the agency, he has now decided to defer
4. decision until after the peace treaty is signed. The US representative
comments that, notwithstanding our consistent emphasis that Japan has a free
choice in the matter, the Chinese Nationaliat:Covernment might blame the US
for the impasse. , COENENTt Although the 25X1
Japanese Government is sympathetic toward the Nationalists, and has supported
them in various international organizations, it can be expected to proceed
cautiously on any matter which might impair future tads relations with the
Chinese Communist regime.
131
SECTION 3 (1ESTERN)
AUSTRIA.ixt Agrees to The Austrian
Government .has yielded toTS:pressure and has agreed to the investigation of
all suspected irregularities in the Austrian use of dollar funds. Chancellor
Fig', after expressing his agreement in a letter to US High Commissioner
Donnelly, found himself bitterly attacked in a Cabinet meeting by his own
People's Party for conducting secret negotiations with the US, and submitting
to impossible conditions. The day was saved for Figl when the Socialists
stopped the Cabinet session by threatening to bring the whole question to the
meet this week with the investigating committee (including ea-count:Ants and
floor of parliament. Donnelly has suggested that Finance Minister Mar meths
a US representative to decide on procedures for the investigation., 25X1
CCNNENTt For nine months, an examination 25X1
of the manner in which the Austrian Finance Ministry and the nationalized
bank, the Creditanstalt, have used Austria's limited foreign exchange (par-
ticularly-dollars) has met with resistance by Margaretha and other govern-
ment officials. WIrm the firm of accountants conducting the investigation
resigned last week because of the uncooperative attitude of the'Austriansp
Donnelly presented the case to Figl and Vice Chancellor Schaerf, adding
that serious instances had been discovered of dollar diversion harmful to
Austria. The Chancellor and Vice Chancellor were then compelled to take
remedial steps, which are crating severe dissension in the Peopl 's Party
ranks. When this situation becomes publicly known, the prestige of the
People's Party, which has been depliring for some time, will suffer further.
TOP SECRET
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Declassified in Part - Sanitized Copy Approved for Release 2013/02/12 : CIA-RDP79T01146A000300240001-3
Declassified in Part - Sanitized Copy Approved for Release 2013/02/12 : CIA-RDP79T01146A000300240001-3
Declassified in Part - Sanitized Copy Approved for Release 2013/02/12 : CIA-RDP79T01146A000300240001-3
25X1